Credits, Grants & Other Incentives

Entrepreneurs seeking startup funds should look beyond the traditional lenders, such as the bank, family or friends. Tax credits, grants and incentive programs could also add cash to the bottom line, and unlike loans, they don’t require repayment.

Tax Credits

Sustainable Business Tax Credit Businesses located in the City of Philadelphia can be classified as certified sustainable businesses once they are certified as B Corporations. B Corporations meet comprehensive and transparent social and environmental standards via the B Rating System. Once certified, a business shall remain eligible to receive Sustainable Business Tax Credits each year that such tax credits are available. For tax years 2012 through 2017, an eligible business shall receive a tax credit of $4,000, which may only be used against the tax based upon annual receipts. Program regulations and applications will be made available several months prior to the filing due date for the Tax Year 2012 Business Income and Receipts Tax return. No more than twenty-five (25) businesses will be certified as Sustainable Businesses in any one tax year.

Green Roofs Tax Credit Credits of 25% of all costs incurred to construct the Green Roof, to a maximum of $100,000, can be applied against Philadelphia’s Business Income and Receipts Tax liability.

New Markets Tax Credit This federal tax credit is designed to generate private-sector capital investment in low-income areas. The program permits individual and corporate taxpayers to receive credit against their federal income taxes for making qualified equity investments in projects that finance community development, stimulate economic growth, and create jobs. Learn more through local providers:

Pennsylvania Job Creation Tax Credit (JCTC) The PA JCTC offers a $1,000 per-job tax credit to approved businesses that agree to create jobs in the Commonwealth within a three-year period. The credit can be applied against various other business tax liabilities Contact: PA Department of Community and Economic Development or (866) 466-3972

Philadelphia Energy Authority’s small business pilot program Philadelphia based, non-franchise, food and drink based businessesmay qualify to receive funding to pay for energy efficient lighting, refrigeration, cooking, heating, cooling, and ventilation equipment through a grant from the Department of Environmental Protection and various rebates from PGW and PECO. Eligible businesses will receive an energy audit and low or no cost recommendations to reduce energy bills. Contact Person: Businesses interested in participating should call or email Philadelphia Energy Authority Program Coordinator, Chelsey Lowe at clowe@philaenergy.org or 215-686-4483.

Philadelphia Job Creation Tax Credit The City of Philadelphia offers eligible Businesses that create jobs in Philadelphia a credit of $5,000 per job created, or 2% of the annual wages paid. Certain guidelines apply. Learn More

Real Estate Tax Abatement The City of Philadelphia offers a 10-year abatement of real estate taxes on qualifying rehabilitation or construction to encourage urban development and improvements to certain deteriorated industrial and commercial properties.Contact: Office of Property Assessment or (215) 686-4334

Welfare to Work Credit This incentive program aims to promote the hiring of workers with barriers to employment, targeting long-term welfare cash recipients. Tax credits of up to $8,500 per hire are available.

Work Opportunity Tax Credit This is an incentive program to promote the hiring of workers with barriers to employment. The program targets short-term welfare cash recipients, veterans, SSI recipients and ex-felons. The WOTC is 40% of the first $6,000 in wages.

Fair Chance Hiring Initiative – An employer who fills a vacant position with one or more a Philadelphia residents who were released from incarceration within the last five year will become eligible for reimbursement after six months. Qualifying employees must work a minimum of 21 hours per week and be paid at least $12.10 per hour. A $5 per hour reimbursement is allotted for each qualified position, up to 40 hours per week and a maximum of 1,000 hours per position annually.

Tax Credit Application for Contribution to a Community Development Corporation (CDC) Businesses contributing to Community Development Corporations may be eligible for a tax credit against the City’s Business Income and Receipts tax. Application

Jump Start Philly Exempts qualifying business from paying the Business Income and Receipts Tax, formerly the Business Privilege Tax, during the first two years of operations. Additionally, fees are waived for eligible new businesses for a variety of licenses and registrations, including the Commercial Activity License, formerly the Business Income and Receipts License.

Small Business Health Care Tax Credit Small businesses that provide health care coverage to their employees and that meet certain requirements generally are eligible for a federal income tax credit for health insurance premiums they pay for certain employees. The employer must have fewer than 25 full-time equivalent employees (FTEs) for the tax year and the average annual wages of its employees for the year must be less than $50,000 per FTE.

Amount of Credit

Maximum Amount. The credit is worth up to 35 percent of a small business’ premium costs in 2010 (25% for tax-exempt employers). On Jan. 1, 2014, this rate increases to 50 percent (35 percent for tax-exempt employers).

Phase-out. The credit phases out gradually for firms with average wages between $25,000 and $50,000 and for firms with the equivalent of between 10 and 25 full-time workers.

Eligibility Rules

Providing health care coverage. A qualifying employer must cover at least 50 percent of the cost of health care coverage for some of its workers based on the single rate.

Firm size. A qualifying employer must have less than the equivalent of 25 full-time workers (for example, an employer with fewer than 50 half-time workers may be eligible).

Average annual wage. A qualifying employer must pay average annual wages below $50,000.

Both taxable (for profit) and tax-exempt firms qualify.

Grants

Business Security Camera Program The City encourages businesses to install exterior security cameras to increase safety in public areas by reimbursing the cost of equipment and installation. Through the program, the Commerce Department awards applicants up to 50% of the total cost of eligible improvements with a maximum reimbursement of $3,000 per single commercial property. Applicants must apply and be approved before starting work.

High Performance Building Program This State of Pennsylvania program provides grants (up to $500,000 or 10% of the total eligible building construction/renovation costs, whichever is less) or loans to help underwrite the cost premiums associated with the design and construction or major renovation of high-performance buildings, as identified in the guidelines.

PA Alternative and Clean Energy Program (ACE) The Alternative and Clean Energy Program (ACE) provides financial assistance in the form of grant and loan funds to eligible applicants for the utilization, development and construction of alternative and clean energy projects in the state.

Small Business Energy Efficiency Grant Program Reimbursement grants up to $25,000 are available from the PA Department of Environmental Protection (DEP) to help small businesses acquire equipment or adopt processes that promote energy efficiency.

Training Grants – Philadelphia Works can help businesses find and train new employees.

Keystone Opportunity Zone Program (KOZ) KOZs are parcel-specific areas where property owners and/or businesses that meet capital investment or new employment targets pay little or no taxes through 2018 or 2025. These taxes include the Business Income and Receipts Tax, Use and Occupancy Tax, Real Estate Tax, Net Profit Tax, State Business Tax, and State sales tax on items consumed at the KOZ site. KOZ sites are located throughout the City, including industrial parks, high tech centers and the Navy Yard.

Storefront Improvement Program (SIP)This program reimburses owners of commercial buildings and businesses within designated commercial corridors who make storefront improvements. The program can reimburse up to 75% of the cost of eligible improvements to a maximum of $10,000 for a single commercial property, or up to $15,000 for a multiple-address or corner business property.

Other Incentives

Kiva

Kiva is a website that enables financially excluded and socially impactful entrepreneurs to access 0% interest small business loans. These loans are crowdfunded by hundreds of lenders from around the world who read your story, lend you as little as $5 each, and rally around your business as potential customers, business advisers, and brand ambassadors.

Small size – First loans are $10,000 or less; subsequent loans can be larger

Short loan term – 36 months or less

0% interest

Administered via PayPal

Crowdfunded on Kiva

Entrepreneur Works

Small Business Loans Entrepreneurs participating in either a peer group, business course or individualized training are eligible for a direct loan product. The Small Business Loan (SBL) program offers loans of up to $25,000 for existing businesses and up to $15,000 for start-ups. SBLs are not tied to membership in a peer group and those applying are eligible to receive assistance assembling their loan package. Unlike a peer loan, applying for a SBL will require a credit check and assignment of collateral.

Peer Loans Entrepreneurs who become members of an Entrepreneur Works chartered peer group are eligible to apply for loans graduating in steps from $500 to $5,000. Individual members must make loan requests through their peer group. Peer loans follow a stepped-loan model, where an individual takes a small loan, successfully repays it, and is then eligible to borrow at a higher loan level (e.g. borrower takes a first loan of $500, successfully repays, and returns to borrow $1,000). Peer loans range from $500 to $5,000 and start at two levels: $500 (basic) or $1,500 (accelerated) depending on the length of their business ownership/experience. Both tracks cap out at $5,000 using a graduated step process. Peer loans do not require a certain credit score or the pledge of collateral; however, each loan must be unanimously approved by the borrower’s peer group members. Peer borrowers are not judged on their credit but are offered the opportunity to have their credit pulled and reviewed.

Philadelphia Business Builder Loan Program This program provides a pathway for small businesses with higher credit risks to obtain bank financing. Loans can be used for working capital, inventory, equipment purchase or capital improvements. This program is intended to increase the flow of capital to small businesses located in low- and moderate-income and /or predominately minority communities in the City of Philadelphia. More InformationContact:1207 Chestnut Street, 6th Floor Philadelphia,19107 Phone: 215-851-1738, Fax: 215-564-9912

Loan Packaging TEC-CC offers loan packaging services for small business owners at affordable prices. Through this program, many businesses have obtained U.S. Small Business Administration Guaranteed Loans.

Economic Opportunities Fund (EOF): This fund offer loans, investment products and services to low-income and under served populations in the Philadelphia Metropolitan Area looking to start or expand their businesses, with a special focus on women and minorities.

The Merchants Fund (TMF) The mission of The Merchants Fund (TMF) is to provide financial assistance to current and past merchants in Philadelphia. Beneficiaries of TMF are current or former business merchants and must demonstrate a legitimate financial need. TMF provides assistance in three areas:

Operating Businesses: The Merchants Fund is committed to providing for the economic needs of the merchant community with modest grants in the areas of Business Stabilization and Loan Matching.

ReStore Retail Grants The Merchants Fund is making this new program available through funding from the City of Philadelphia Commerce Department.

Special Grants The Merchants Fund selectively awards grants to foster the betterment of a group of merchants on a corridor or in a business district. More Information

General Information

The Local Initiatives Support Corporation (LISC) The LISC Products and Services Guide outlines financial products and community services that LISC provides to community development corporations for building and developing sustainable Philadelphia communities. These include:

Philadelphia Industrial Development Corporation (PIDC) PIDC provides an array of services to help local businesses become more profitable, provide goods and services, and generate jobs that keep Philadelphia’s economic foundation strong. This includes a range of financial and managerial services, including direct loans to small businesses and minority contractors.